RAM: Slower export growth in September

PETALING JAYA: RAM Ratings expects Malaysia’s export growth to moderate further to 15.9% in September in anticipation of a further tapering in growth of exports to China and Singapore.

The Department of Statistics is scheduled to release the external trade statistics tomorrow.

Exports rose 21.5% to RM82.2 billion in August from RM67.6 billion in July.

The rating agency said in a statement today that the 15.9% growth expectation for September is in line with the projected moderation in restocking activities for electronic goods, which is one of the main drivers of export growth, once inventory requirements have been fulfilled.

“In line with the above, import growth is also estimated to moderate to 18.2% given its strong correlation as a key input factor for exported goods amid Malaysia’s close linkage with the global value chain.”

Meanwhile, RAM Ratings expects the country to record a lower trade surplus of RM7.6 billion in September against RM9.9 billion in August.

It said imports of consumption goods have also been trending upwards since the beginning of this year, as it spiked to 21.9% in July 2017, the highest it has been in 16 months, before moderating to 17.8% the following month.

“This is in line with our expectation of the continued resilience of private consumption, particularly demand for necessities, as growth has been mainly driven by such consumer items.”

With the normalisation of labour conditions and wage growth, underpinned by favourable demographics, RAM Ratings anticipates private consumption to strengthen, thereby feeding the robust expansion of imported consumption goods.

Moving forward, imports and exports are envisaged to keep expanding at a healthy pace, which will be facilitated by buoyant industrial activity and upbeat global demand.